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Export Restrictions on Huawei and Affiliates Already Effective

Tuesday, May 21, 2019
Sandler, Travis & Rosenberg Trade Report

New restrictions on exports to Chinese telecom giant Huawei and 68 of its affiliates took effect May 16, several days earlier than previously anticipated. Given the extent of Huawei’s supply chain in the U.S., companies should immediately begin screening or re-screening their customer, vendor, and other third-party data against the list of Huawei affiliates to identify any potential ongoing or pending transactions with these parties and set up appropriate controls to ensure compliance with U.S. export control laws. Violations of export restrictions can result in significant financial penalties, denial of export privileges, and reputational damage.

The Bureau of Industry and Security has issued a final rule that, effective May 16, adds Huawei Technologies Co. Ltd. and 68 non-U.S. affiliates to the Entity List. These affiliates are located in Belgium, Bolivia, Brazil, Burma, Canada, Chile, China, Egypt, Germany, Hong Kong, Jamaica, Japan, Jordan, Lebanon, Madagascar, Netherlands, Oman, Pakistan, Paraguay, Qatar, Singapore, Sri Lanka, Switzerland, Taiwan, United Kingdom, and Vietnam. Huawei is being added due to its alleged involvement in unlicensed exports from the U.S. to Iran, and its affiliates are being added because they present a significant risk of acting on Huawei’s behalf to engage in such activities.

For all newly listed entities BIS is imposing a license requirement for exports of all items subject to the Export Administration Regulations and a license review policy of presumption of denial. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to these entities.

Shipments of items removed from license exception eligibility or for export or reexport without a license (NLR) as a result of this rule that were en route aboard a carrier to a port of export or reexport on May 16 pursuant to actual orders for export or reexport to a foreign destination may proceed to that destination under the previous license exception eligibility or without a license.

More Entity List additions will likely follow in the coming weeks and months to promote the Trump administration’s goal of securing the U.S. information and communications technology and services supply chain, including hardware, software, and other products for information processing, storage, retrieval, or communication by electronic means.

ST&R’s export controls and sanctions team is positioned to support companies in their screening efforts and help them mitigate the risks of doing business in this ever-evolving geopolitical climate. Please contact export attorney Kristine Pirnia for more information.

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